Fed’s Mester: Market Vulnerabilities Need ‘Urgent Support’

Structural vulnerabilities in parts of U.S. financial markets need to be addressed relatively quickly to keep the Federal Reserve from being blown off course as it raises interest rates further to bring down high inflation, Cleveland Fed President Loretta Mester said on Thursday.

“It is very clear that well-functioning financial markets are needed if monetary policy is going to be most effective,” Mester said in prepared remarks to a financial stability conference. “Addressing with some urgency the vulnerabilities that exist in important parts of the financial system, I think would be very important to help us avoid a very uncomfortable situation of a conflict between monetary policy and financial stability as we continue to move monetary policy into more restrictive territory.”